It was an “error in good faith.” This was the response of the Bank of the Philippine Islands on the P134.6-million penalty impose by the Securities and Exchange Commission on the bank’s failure to secure a confirmation of exemption on the registration of a seven-year stock option plan it launched in 2013.
This is a violation of the Securities Regulation Code Section 8.1, which requires the stock plan to be registered with SEC and prospective buyers to be informed before securities are sold.
A disclosure to the Philippine Stock Exchange on Monday said the SEC assessed the penalty at P134,622,017.59 and informed the bank in a letter dated 3 February 2023.
BPI yields to omission
BPI’s statement emailed to the Daily Tribune said the Ayala-led bank “had omitted to register its 2013-2019 Executive Stock Option Plan and Executive Stock Purchase Plan, or avail of the appropriate exemption, due to error in good faith related to the application of left-over exempted shares from a previous employee stock program.”
SEC Rule 10.2.1 says the exemption from registration applies only to those “not necessary in the public interest or for the protection of the investors, such as by reason of the small amount involved or the limited character of the public offering.”
SEC Rule 10.2.2 adds “the covered securities should be available only to the parties or persons named in the application for exemption for a specified period.”
SEC Rule 10.2.6 also stated, “no securities sold under exempt transactions shall be offered for sale or sold to the public without prior registration.”
Holders of exempt securities should only be up to 19 people within a year.
The code also indicated the sale or offer for the sale of exempt transactions should not be actively solicited from or marketed to non-qualified buyers in the Philippines by any entity, including its agents, representatives, employees or any person acting on its behalf.
BPI said it is cooperating with SEC and will obey the commission’s final decision.
“BPI intends to abide by the final decision of the Commission. Rest assured that BPI is committed to being in proper compliance with Philippine regulations,” the bank said.